Financing Circular Economy – Insights for Practitioners in Viet Nam

How can resources be mobilised to accelerate the transition to a circular economy in Viet Nam? How can the different financial instruments from venture capital over loans to bonds be better used? How can financial risks be reduced through leasing, guarantees or public-private partnerships? What are the barriers but also entry points for financing circular investments in specific sectors such as textiles or in industrial parks? 

In an effort to address those questions, the Central Institute for Economic Management (CIEM) and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH organised a workshop on “Financing Circular Economy – Insights for Practitioners in Viet Nam” on March 28th 2023 in Hanoi.

At the event, key findings from research reports on ‘Financing Circular Economy – Insights for Practitioners‘ and ‘Finance for circular economy in low- and middle-income countries‘ were shared with relevant practitioners in Viet Nam. The research, conducted by GIZ and Frankfurt School of Finance and Management, provides prospective guidance on how development cooperation could contribute to closing the financing gap for circular economy in low- and middle-income countries, with focus on five countries: Albania, Colombia, the Dominican Republic, Rwanda and Viet Nam.

Circular economy is gaining traction worldwide and in Viet Nam. A circular economy promises to save resources and prevent waste as well as Green House Gas emissions, while creating new economic opportunities. First solutions are already being piloted but for further scaling financing represents a vital bottleneck to be tackled early and fundamentally.  In this regard, in Decision No. 687/QD-TTg issued on the 7th of June 2022, the Prime Minister of Viet Nam mandates the Ministry of Planning and Investment (MPI) to mobilise resources for circular economy investment projects and auxiliary services as well as to develop circular economy criteria.

The workshop highlighted that there is a need to raise awareness on circular economy and related investments projects among all stakeholders. Capacities within the financial sector to screen and select investment opportunities in the circular economy have to be strengthened through trainings and supportive guidelines. Such efforts should be closely aligned with the green taxonomy under development and its future implementation. Moreover, bankable business models need to be developed and studied in more detail to provide concrete blueprints for further worthwhile investments to follow.

At the workshop, representatives of banking industry, academia and private sector shared their insights and discussed priority measures that can be applied in Viet Nam.

The workshop was part of the project “Go Circular” implemented by GIZ on behalf of the Federal Ministry of Economic Cooperation and Development of Germany. Go Circular supports the transition to a circular economy at global level and in three partner countries, including Viet Nam, Columbia and Ghana. The project supports stakeholders in developing innovative circular economy solutions within value chains, strengthening mechanisms for scaling up tested approaches, and global action via alliances. Priority measures in Viet Nam are promoting innovative circular business models and providing advice on implementing national strategies for the circular economy.